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1 Preliminary Economic Assessment of Water Resources of the Pangani View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Research Papers in Economics 1 Preliminary Economic Assessment of Water Resources of the Pangani River Basin, Tanzania Jane K. Turpie, University of Cape Town, South Africa. [email protected] Yonika M. Ngaga, Sokoine University of Agriculture, Morogoro, Tanzania, [email protected] Francis K. Karanja, IUCN -The World Conservation Union, Nairobi, [email protected] Abstract A study was conducted in Pangani River Basin to provide estimates of the value of water in different uses and review various issues and economic tools pertaining to water resource allocation and financing mechanisms in the basin. The study was carried out in October-November 2003, and was based on existing literature, GIS data, interviews, focus group discussions and a household survey. Preliminary findings on the value of water in alternative uses indicated that for irrigated agriculture such as coffee, the estimated average value was about Tsh. 700 – 6000/m3. Water was estimated to be worth Tsh. 30 – 100/m3 in large scale sugar production, Tsh. 3500 – 5300/m3 for greenhouse-based cut-flower production, Tsh.200 – 600/m3 for small scale traditional furrow irrigation agriculture, and Tsh. 600 – 1400/m3 for improved irrigation agriculture schemes. Water prices for domestic consumption were equivalent to Tsh. 1500 and 1250 per m3 in the highlands and lowlands respectively. Key words: Economic valuation, Water, Pangani Basin, Instruments, Incentives Introduction As water resources become increasingly scarce in Africa, the need for the use of economics to aid in decision-making and management becomes apparent. Indeed, global experience shows that economic approaches are increasingly becoming useful in water management issues. Water is the basis of the economy as well as essential for human life and biodiversity. The Pangani River Basin in north-eastern Tanzania provides a good starting point for evaluating the economic issues around water resources and how economics can be used to improve their management to align with national goals. Tanzania has committed itself to an ambitious poverty reduction strategy, and plans to transform itself into a middle-income country by 2025. This will require massive economic development and growth. Yet Tanzania faces water scarcity in some cases, at least partly due to the inefficiency with which water is used. This scarcity has been exacerbated by population and economic growth which has not been accompanied by improved resource management. Fortunately, Tanzania has adopted a progressive National Water Policy that aims at sustainable development and management of water resources. A Water Resources Strategy and Legislation are being drafted. For the first time, water allocation will consider both human needs 2 and environmental protection. In addition, the policy aims to implement fees for financing water resources management and to use economic and other instruments to manage the use of water resources and ensure long term sustainability. The principal concerns affecting water resource management in the Pangani basin are: • Threats to water supply – due to climate change, forest degradation, inefficient uses and pollution; • Increasing demand for water – due to population and economic growth; • Shortages for power generation – due to upstream water abstraction and siltation of dams; • Conflicts over water resources – between different sectors and between upstream and downstream users; • Environmental degradation – due to reduction in water flows necessary to sustain ecological processes and sustainable livelihood practices; • Insufficient funds for water resources management – inadequate government funding exacerbated by lack of income from users; • Cultural heterogeneity – the diversity of users and their relationships with the environment creates challenges for water management. The Pangani River basin and its management The Pangani River drains a basin of 43 000 km2 in north-eastern Tanzania and a small part of Kenya. The basin contains fourteen districts and two municipalities, falling within the Kilimanjaro, Manyara, Arusha and Tanga Regions of Tanzania. Mount Kilimanjaro and Mount Meru provide the main source of river flow, and the basin also drains the Pare and Usambara Mountains in the north-east. Numerous tributaries drain the mesic highland and upper basin areas, whereas water is far scarcer in the arid lowland areas, with the Pangani River being a prominent feature in the landscape. In addition to several small natural lakes, a dominant feature is the 14,000 ha Nyumba ya Mungu Dam located on the Pangani River in the upper basin (Rohr and Killingtveit, 2002). Several wetlands exist in the basin, most notably the Kirua swamps downstream of Nyumba ya Mungu, which cover 90,000 ha. The highland and upper basin areas are characterised by urbanisation, densely populated rural areas and cultivation. The lowlands have scattered croplands associated with smaller settlements, usually close to the Pangani River. Arid rangelands make up much of the remaining landscape. The total population of Pangani River Basin is approximately 2.6 million. Population growth rates are up to 4.0% in the highland areas (Arusha Region) but relatively low towards the coast (1.8% in Tanga Region). While water supply depends primarily on precipitation in the highland areas, it is greatly affected by management of the whole catchment, particularly in the highlands. Natural forest cover encourages infiltration of water during the rainy season, which is then released gradually, maintaining flows throughout the year. As forest and other vegetation and soil cover are degraded, so less water infiltrates and more water is lost during flood periods. The quality of water supply is also affected by catchment activities, which lead to soil erosion and pollution. 3 Water resources of the Pangani River Basin plus three much smaller basins (total 56 000 km2) are managed by the Pangani Basin Water Office (PBWO), which allocates user rights for water. Most water is allocated to the higher lying areas. The natural environment has not been considered as a consumer of water and has therefore not received direct water allocations. Environmental resources have been affected as far as the Pangani estuary, where saltwater intrusion is a problem, and the associated near-shore environment, where some farming and fisheries are thought to have declined as a result of decreased freshwater flows. The objectives of this study were to provide estimates of the value of water in different uses within the Pangani River Basin, as well as to review various issues and economic tools pertaining to water resource allocation and financing mechanisms for Integrated River Basin Management (IRBM). This study was conducted with a view to providing the preliminary understanding required to design more detailed research that will inform the sustainable, efficient and equitable allocation of water in the basin. Activities investigated included irrigated agriculture, ranging from large scale commercial coffee estates to small scale traditional furrow irrigation, water for livestock, domestic use, use of aquatic ecosystem goods and use in hydropower generation. Study methodology The study was carried out in October-November 2003. Information on the study area was collected through literature, interviews and visit to the study area. Biophysical information was obtained from existing GIS data and population estimates were obtained from the recent (2002) census. Water use was described on the basis of data from the Pangani Basin Water Office. The value of water in large-scale commercial agriculture was estimated on the basis of interviews with farm managers, while the value of water in small-scale agriculture and the value of aquatic natural resource use was estimated from data collected in key informant interviews, focus group discussions and a household survey of 203 households in 14 villages located in four parts of the Pangani River Basin: the highland areas, upper basin, lower basin and around the Pangani estuary. Domestic water use was estimated and valued from survey and municipal data. The value of water power production was estimated based on information supplied by TANESCO. Values are in Tsh, where Tsh1000 = US$1. The study was carried out in a very limited time frame and with very small sample sizes. The results are not intended for direct use in water allocation decision- making, and it is important to view the results as a preliminary description that will help to guide future research. The Value of Water Consumption Domestic Consumption Domestic consumption of water could be considered to be the most important type of water use in the basin, in that it is vital to human wellbeing. Tap water is supplied to major urban areas, smaller towns and a large number of rural villages. However, a 4 large proportion of the population relies on fetching their own water from rivers and wells (rural population of Pangani River Basin = 2.16 million, urban population = 427,000). Urban consumption is estimated to be in the region of 70 litres per person per day, while rural consumption is about 37, 22, 18 and 28 litres per person per day in the highlands, upper basin, lowlands and coastal areas respectively. The value of water for domestic use is probably better reflected by the willingness to pay, demonstrated through trade of water in rural areas, than by prices set by authorities in the urban areas. Water prices are equivalent to Tsh 1,500, Tsh 1,250 and Tsh 1,200 per m3 in the highlands, lowlands and at the coast respectively, far higher than the prices charged by PBWO. The total value of domestic water supplies in Pangani River Basin is estimated to be in the order of Tsh 37 – 46 billion. Irrigated Agriculture Agriculture is the biggest user of water with over 50,000 ha of fields irrigated in Pangani Basin. This includes large commercial estates (mainly coffee, also sugar), flower farming and small-scale mixed cropping. Small-scale farmers have plots of about 0.1 – 0.2 ha in the highlands, increasing to 0.8-1.5 ha in the lowlands.
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